Petroceltic Discovers Gas in South Eastern Algeria

- Petroceltic Discovers Gas in South Eastern Algeria

Tuesday, July 12, 2011
Petroceltic International Inc.

Petroceltic, in association with its partner Sonatrach issued an operational update on its Isarene permit (Blocks 228 & 229a) in the Illizi Basin in South Eastern Algeria. Petroceltic operates the permit with a 56.625 % interest, Sonatrach holds a 25% interest, and Enel holds 18.375% interest, pending final Government of Algeria ratification, which is expected later this year.

Highlights

• AT-6 well encounters 45 meters of net pay
• AT-5 testing underway
• Second rig mobilized to accelerate appraisal activities
• Drilling of AT-7 and AT-8 wells scheduled to commence this month

AT-6 appraisal well

Well AT-6, the third well in the current appraisal campaign on the Ain Tsila gas discovery was drilled to a total depth of 2085m and has successfully logged gas in the main Ordovician reservoir. The well is currently being suspended in preparation for testing with a rig-less testing unit following completion of the testing progra currently underway at AT-5.

The AT-6 well is a vertical well targeting a broad culmination in the South East of the Ain Tsila Field outside the 3D seismic survey area, approximately 17 km South East of the AT-4 well location. The principal objective of the well was to extend the proven gas in place and to test the reservoir quality towards the mapped south eastern limit of the field. The well commenced drilling on June 9, 2011 and reached a total depth of 2085m on July 5, ahead of schedule and within budget.

The Ordovician reservoir was encountered as expected with good gas shows and a full suite of logs was run. Initial log interpretations indicate a gross Ordovician reservoir interval of 168m, and a net pay interval of 45m.This confirms the extension of the field at this significant step-out from the previously drilled wells.

Following suspension of AT-6, the Dalma rig will move to drill a further vertical appraisal well in the far southwest of the field, AT-7, which is expected to commence drilling operations in late July.

AT-5 well test

Rig-less well testing operations have recently commenced at the AT-5 wellsite, following minor delays associated with the arrival of certain personnel and equipment to the site. AT-5 was drilled with a 376m of horizontal section through a fractured "pop-up" feature in the Ordovician reservoir. Depending on the results of initial testing, the program is likely to include hydraulic fracturing of some of the reservoir zones to enhance gas flow rates.

Second rig mobilized for extended appraisal program

A second rig, the KCA Deutag T-211 rig, has mobilized to the Isarene permit and is currently rigging up to drill well AT-8 at a location in the north of the field. The AT-8 well is expected to spud in mid-July and is a vertical well targeting a structural pop-up feature similar to AT-5. The well objective is to test for significant additional gas in place as well as potentially accessing fracture features identified on seismic.

With the addition of a second rig, the current six well delineation program is expected to be complete by year end in time for the preparation of the Final Discovery Report for submittal to the Algerian authorities.

Brian O'Cathain, Chief Executive of Petroceltic commented, "Initial results from the AT-6 well are very encouraging and increase the proven area of the Ain Tsila field considerably to the southeast with this large step-out. We are also extremely pleased that testing operations on AT-5 are underway. We are now entering a most exciting and busy period on our Isarene permit in Algeria with 2 rigs and a rig-less testing unit in operation. We look forward to announcing further well results by the end of July."

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